Kenneth Stelley, 36, who owns the Gateway Country Club, Bynea Carmarthenshire, was fined £1,500 and ordered to pay £1,000 costs by Llanelli magistrates court after admitting to the charge.
The area is home to the rapidly disappearing water vole and Stelley was granted planning permission for the nine-hole course on the understanding that the habitat, bordering the National Wetlands Centre for Wales, be protected.
The court heard Strelley was fully aware of his obligation to protect the site but on 2 May 2008 witnesses found water courses and reed beds blocked following earth works as part of the course perpetration.
He pleaded guilty to one charge of damaging or destroying a wild animal shelter.
In mitigation the court heard there was no suggestion that the water voles came to harm.
Strelley said he never intended to cause any damage to the site and the work was carried out by contractors.
The development has been put on hold following the incident, reportedly costing Strelley between £80,000 and £100,000.
He also protested that Carmarthenshire Council had conducted much larger earthworks on the same site, though said he would be extremely careful in undertaking future work.
It is the first time in Wales wildlife protection legislation had been used to prosecute a case based on the destruction of a protected water vole habitat.
Jeff Thomas of the Dyfed-Powys CPS said: "This is a landmark case for Wales and we hope it sends a clear message to anyone who might think they can get away with the destruction of a protected environment."
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